I once had a plant manager tell me his factory had implemented Six Sigma, but there was not a single statistical process control chart. How is that possible?
Another had the control charts in place but refused to allow the operator to shut the process down when it indicated an out-of-control condition. Another plant claimed it was lean but had a dozen bins of parts stacked on the floor as part of a two bin system. Another plant routinely violated the daily production plan by rescheduling orders, and then the plant blamed the supply chain for causing it to frequently run out of parts (which then drove it to change the schedule… a vicious circle).
Addressing each of these situations requires a significant shift in management philosophy that many companies are not ready (or willing) to embrace. “What is the minimum change we can put into place to claim we are doing lean and Six Sigma to get the board of directors off of our backs?” the leaders might ask themselves.
Over the years, I have visited several plants where the company leaders claim that they have been doing lean and Six Sigma for years. And, when you first walk into the factory, the overall impression may be overwhelmingly positive. The factory might be clean, well lit, organized and seem to be running smoothly. However, if one peels back the façade just a bit, things might not be as rosy as they appear.
The example below may shed some light on why lean and Six Sigma may not be living up to its full potential in your business.
Mary stood outside of her new office looking at the nameplate on the door: Mary Jones, Plant Manager. “Not bad for someone who started her career on an assembly line,” she thought.
“I think the door is unlocked if you want to go on in,” said Mary’s new administrative assistant.
“Thanks,” said Mary with a little embarrassment. “Since this is my first day, I want to spend as much time this morning as possible on the factory floor. So, let’s hold any meetings until after lunch.
“Do you want me to get one of the production managers to give you a tour?” asked the assistant.
“No, I think I can find my way around on my own,” said Mary. “My plan will be to spend at least an hour each day on the shop floor. So, please block out time as we begin to establish an ongoing schedule.”
Mary went into her office and pulled out a notebook with notes she took when she was offered the job.
“The plant has been doing lean and Six Sigma for five years and it looks like they have won a couple of awards,” read Mary as she looked over the status report from the previous plant manager:
Five Year Lean/Six Sigma Implementation Status Report
5S implemented across the plant and offices – Check (Note: Still waiting for labels so we can mark where all of the staplers and coffee mugs go, then we can focus on pencils and pens)
Aggressive audit process to make sure that the workers adhere to all 5S guidelines - Check, with appropriate harsh punishments for failure (Note: Audit scores are not improving, not sure why.)
Green, yellow, red status lights in place and all set to green. – Check (Note: No one would dare change a light from green. This would send the wrong signal to any customers who are in the building.)
Employee process improvement idea boards installed in every department. – Check (Note: When we can get the necessary funds and the daily fires magically go away, we will reassign people to work on these ideas.)
Visual management signals (kanbans) in place to drive production – Check (Note: Signals are followed when convenient and everything runs 100% smooth. This has not happened yet, but it will someday.)
Hour by hour production boards installed – Check (Note: Need to replace all dry erase markers since none of the boards have been filled out for months.)
Management walks to identify waste. – Check (Note: Employees reprimanded on the spot when waste is found.)
Regular employee team improvement meetings (kaizens) – On Hold (Note: Still working on implementing ideas from our last meeting that was held 2 years ago.)
Lean/Six Sigma implemented – 100% Complete (Note: Disappointed that customer service metrics have not significantly improved.)
Her new boss explained that he wanted Mary to focus on why the return on investment of the improvement efforts was so poor and determine what was needed to get things back on track.
Later that morning, Mary made her way out to the factory. Her first impressions were mostly positive. She started her walk in the main assembly area and introduced herself to the employees.
“How are things going?” she asked to a group of operators.
“Could be better, the main line is down again and we are killing time as we wait for it to start back up,” chimed in one of the associates.
“Does it go down often?” Mary asked as she noticed that all of the status lights were still showing green even though the line had clearly not moved for some time.
“Several times a week,” said another worker. “Then we have to work overtime on the weekend to catch back up. I can’t remember the last time I was home with my family on a Saturday. We have several ideas on ways we might be able to prevent these shut downs. But, like most of the other ideas we come up with, they are in the category of ‘need more data’ and are on hold.”
Don’t the feeder lines shut down when the kanban squares are full?"
Mary looked around and noticed that all of the feeder subassembly lines were still running. There were four squares painted on the floor with a subassembly unit in each square plus two more units not in squares. “Don’t the feeder lines shut down when the kanban squares are full?” asked Mary.
“No. They keep running so they won’t need to come in on the weekends. I guess it saves the company money since they don’t need to pay overtime.”
Mary then noticed that there were more subassemblies stacked in an open area across the aisle. “Wow,” stammered Mary as she realized that there were hundreds of units stacked to the roof. She immediately called her new staff together to meet her on the shop floor.
“This is unacceptable,” said Mary as she pointed out all of the extra work-in-process inventory. “From now on, we are not going to violate any kanban squares. When they are full, the lines feeding those squares will stop. Also, I want all of the status lights disconnected. All green lights may look good, but they are meaningless if they are not used properly.”
“Won’t that drive up our overtime costs?” asked one of her staff. “And it will be difficult to meet our monthly delivery commitments.”
“That is another change we will need to make,” said Mary. “We will start posting a daily linearity score which will show how well we met the schedule for that day. This will help motivate all of us to address the problems when they occur. Each day we don’t ship 100% to schedule will be considered a failure.”
She softened her tone a bit when she noticed the shocked look on her new staff’s faces. “Don’t worry. We will get through all of this together, and I will make sure we get the resources we will need to make this right. I also expect great things from all of our factory associates as we get them trained and more involved.”
Over the next several months, all of the employees were retrained and several teams were established to start addressing issues. The first several weeks were painful, but things slowly began to improve as the teams began fixing the root causes of why the production lines were going down.
“Tell me why I should not FIRE you immediately!” shouted Mary’s boss at their next quarterly review. “I hired you to turn that plant around and look at the results! On time delivery numbers are down, overtime costs are up, and employee utilization is down. What is going on?”
“The on time delivery numbers are to the customer request instead of promise so we expected them to be lower; overtime costs went up at first but have come steadily down over the past several weeks; and who really cares about employee utilization if we are getting orders out the door on time? Plus, every line stoppage, we immediately huddle the workers so they can work on improvement ideas so the time is not wasted,” replied Mary. “I know this is a bit of a shock, but we had to shake things up and the metrics don’t yet show the entire picture. Look, you can fire me if you want. But before you do, will you at least come by the plant and let me show you what we are doing?”
Mary’s boss agreed and paid a visit a few days later. They were part way through the tour of the factory when Mary shared that they were about to witness a demonstration that would show how things have changed. With that, she motioned to a maintenance person who quickly flipped a circuit breaker and switched a fuse with one that was already blown. Instantly, the main line came to a halt.
“What did you just do?” asked her bewildered boss.
Within seconds, a team began to form on the plant floor. It was clear that they knew what to do and that there was heavy involvement from support resources from the office as well as the shop floor workers. They split into several small groups to go out and quickly gather data on what might have caused the line to stop. One of these small groups included an electrician and they went by the power panel and began checking the fuses.
“I think we found the problem,” shouted the associates. They replaced the blown fuse with a spare and then switched on the power. The line began moving again. Total down time was less than five minutes.
“Impressive,” said Mary’s boss.
“Wait, there is more,” said Mary. Immediately, the response team went into a conference room and began to fill out a root cause/corrective action plan. “We call them ‘rapid correction teams’ and they know that we have got to permanently fix problems if we have any hope of meeting the customer’s needs. We also focus on only making what is on the schedule and not violating any of the visual management systems such as the kanbans. Before, the plant looked good but none of the spirit of lean was in place. This has been addressed and we are starting to see positive results. We just need more time to get this level of involvement throughout the factory, and I promise the metrics will continue to improve.”
“I will give you one more month,” said the boss. “But I expect results.”
One more month to change decades of bad practices, thought Mary with a sigh.
The Three Levels of Lean and Six Sigma Implementation:
Level 1 – The Grains of Rice
Number of Ideas – High
Difficulty to Implement – Low
Improvement in Customer Metrics – Minimal
Rice is fairly easy to prepare and is a staple in many people’s diet. However, it takes many, many grains to make a difference. In the improvement world, grains of rice represent the common sense ideas that are fairly easy to implement and may move the needle on the customer metrics scorecard if enough of them are implemented. However, many times, these improvements are difficult to quantify on their own (For example: How much money goes to the bottom line by moving tools closer to the operator or painting the factory floor?).
Tools and activities in Level 1 would include 5S, shift start up meetings, employee idea boards and basic problem-solving tools (such as 5 Whys and 5 Ms). My fear is that many companies are doing the “Grains of Rice” improvements and then claim they are a lean and/or Six Sigma company when in fact, they are just scratching the surface.
Level 2 – The Spirit of Lean and Six Sigma
Number of Ideas – Medium
Difficulty to Implement – Low (High without upper management support and a team based culture)
Improvement in Customer Metrics – High
Tools and activities in Level 2 would include doing everything necessary to ensure a safe work environment, proper usage of self-directed work teams, utilizing pull systems (with a willingness to shut the line down if there is no demand), following visual management signals (such as kanbans), allowing employees to control their processes with statistical process control, and focusing on meeting the schedule daily (linearity).
Why are company leaders reluctant to implement Level 2 changes? There are many reasons such as a lack of understanding of the principles, fear of failure, short-term hits to metrics as things shift to the new ways, and using the wrong metrics (such as employee and machine utilization).
All of the company leaders need to be on board or one of the leaders in the chain of command has to be willing to fight the old ways of doing things (at a high risk to their job security) in order for Level 2 ideas to succeed.
Level 3 – Process Innovations
Number of Ideas – Low
Difficulty to Implement – High
Improvement in Customer Metrics – High
Level 3 requires a significant change to a process or design. This level includes the implementation of new technologies (i.e. additive manufacturing – 3D printing), value analysis/value engineering, changing materials to improve quality and reduce costs, and dramatic changes to the process (For example, going to powder paint vs. wet).
These ideas usually require extensive research and development, prototyping, and testing (frankly, the kinds of things most engineers would prefer to work on). Because of the many steps involved, these ideas may take months (if not years) to implement and could consume lots of resources -- but the pay back is significant. If too many resources are dedicated to Level 3 ideas, however, there may not be enough to focus on the previous two levels.
So, what does it mean to be a lean/Six Sigma company? I believe active projects must be going in all three of the above levels. Otherwise, there might be a nice looking factory (façade) to show the customers and shareholders built around an outdated production model; an effective smokescreen. And then the company executives will wonder why they are not seeing better results.
John Dyer is president of the JD&A – Process Innovation Co. and has 28 years of experience in the field of improving processes. He started his career with General Electric and then worked for Ingersoll-Rand before starting his own consulting company. Dyer can be reached at (704)658-0049 and [email protected]. Linked In Profile: http://www.linkedin.com/pub/john-dyer/0/646/75a/ He is on Twitter: @JohnDyerPI.